BOSTON — It’s been five years since recreational marijuana became legal in Massachusetts. In that time, the Cannabis Control Commission has granted 249 final licenses and 122 marijuana retailers have opened in the state.
Since November 2018 sales have grossed $1.45 billion, generating more than $90 million in sales tax alone to the state.
As the state grapples with this evolving industry, Boston 25 News is examining how the system is working.
For Vanessa Jean-Baptist and Mark Bouquet, a former laundromat on Brockton’s Pleasant Street, transformed into a retail marijuana shop, is a clean start.
“We’ve been through a lot of hurdles to get to this point. We never gave up and we’re just grateful that we’re here,” says Bouquet.
One of the biggest hurdles: raising the capital.
It takes an estimated $500,000 just to begin the process in Massachusetts, according to cannabis market research firm Arcview.
Hurdle two: finding a municipality to grant the “host community agreement” or HCA required to open.
“It was very challenging because each municipality is different,” says Jean-Baptist.
Under state law, municipalities also may require applicants to pay a ‘community impact fee,’ up to 3% to cover costs “reasonably related to the pot shop’s operations. But what “reasonably” means has not been clear.
A Massachusetts Cannabis Reform Coalition and the Massachusetts Grower Advisory Council study found 79% of the state’s host community agreements required payments exceeding the 3% limit. The report also found many deals called for “voluntary” donations for third-party charities. Concerned those costs would freeze out smaller cannabis companies and applicants in communities of color, the Massachusetts Grower Advisory Council petitioned the courts, asking that the Cannabis Control Commission be given authority over the agreements, instead of cities and towns.
“This is a topic that is ripe for legislative consideration and I know that it had momentum in the last session,” says Shawn Collins, Executive Director of the Cannabis Control Commission.
“It has been a point of contention and something that has certainly served as a hurdle or a barrier to entry into the marketplaces, being able to successfully navigate that element of our licensing process,” Collins added. He says the commission has also asked the state legislature for that authority.
“The industry tends to go try to go to the Statehouse to circumvent municipal authority because it’s easier for them and that’s part of what businesses do all the time,” says Massachusetts Municipal Association president Geoffrey Beckwith. He says cities and towns have a right to any fee they impose, whether it’s a pot shop or a cable tv supplier.
“Cities and towns have this authority to negotiate on behalf of the public interest, not the private interest, but the public interest, and that’s totally appropriate and should be maintained in state statute,” said Beckwith.
Some towns are working it out on their own. Northampton is home to the first recreational marijuana store to open in the state. The city stopped collecting community impact fees on January 1st. Mayor David Narkewicz tells Boston 25 News they now have four pot shops and they’re treated like businesses with liquor licenses.
“Now that Northampton has had the experience of having medical and retail, and we’ve seen how it’s operated. To me, it felt like we didn’t need to collect it upfront,” Mayor Narkewicz said.
Not all cannabis companies find themselves at odds with municipalities.
“We were very fortunate with the towns that wanted to have us, stuck to the HCA guidelines, 3% and no more. We didn’t find that they wanted this and this and this and this.” said Ellen Rosenfeld of the Commonwealth Cannabis Company. The Rosenfelds leveraged a century of business ownership in the state to secure HCA’s for Commonwealth Cannabis in four towns.
“We grow the cannabis. We process the cannabis. We have a kitchen. We have a lab. We have retail dispensaries We handle everything from planting seeds to final sale,” says CEO Marc Rosenfeld.
Boston 25 News toured the CommCan hub and found everything from a production studio working on commercials for a pot-infused soda... to an automated machine that packages bud for sale.
For others to experience this type of success, President Ellen Rosenfield says the state and the CCC need to figure out the regulation issues. “I believe it’s the most difficult in any state to stay within parameters and the minute you think you’ve figured out how to do it, they come out with a whole new set,” says Ellen.
Friday, April 16, Boston 25 News will look at the question of equity as licenses are granted. Be sure to join us for an in-depth special looking at the Marijuana in Massachusetts, 5 years later, on Friday, April 23 at 10:30 p.m.
Cox Media Group